Yen Falls Amid BoJ Rate Hike Uncertainty, Risk-0n Mood

(RTTNews) - The Japanese yen weakened against other major currencies in the Asian session on Wednesday, as the uncertainty about the likely time of the Bank of Japan's (BoJ) next interest rate hike and the increasing risk-on mood by the investors keeps the safe haven JPY declining.

Investors currently seem to believe that the BoJ's chances of further policy normalization would be further delayed due to the domestic political instability and the possible harm that higher U.S. tariffs could do to the economy.

The Asian shares traded higher amid improved outlook for interest rates after US consumer price inflation for July came in line with expectations. The U.S. and China also confirmed a 90-day extension of their trade truce.

Following the release of the US inflation report, CME Group's FedWatch Tool is indicating a 94.4 percent chance the Fed will cut rates by a quarter point in September.

The JPY is also impacted by the US-Russia conference to settle the war in Ukraine and an extension of the US-China trade truce.

In economic news, data from the Bank of Japan showed that the producer prices in Japan were up 0.2 percent on month in July. That was in line with expectations following the upwardly revised 0.1 percent contraction in June.

On a yearly basis, producer prices rose 2.6 percent - exceeding forecasts for 2.5 percent and down from 2.9 percent in the previous month.

Export prices were up 0.3 percent on month and down 1.1 percent on year, the bank said, while import prices rose 1.1 percent on month and slumped 5.1 percent on year.

In the Asian trading today, the yen fell to 173.02 against the euro, 199.98 against the pound and 183.62 against the Swiss franc, from yesterday's closing quotes of 172.56, 199.56 and 183.30, respectively. If the yen extends its downtrend, it is likely to find support around 174.00 against the euro, 201.00 against the pound and 186.00 against the franc.

Against the U.S., the Australia, the New Zealand and the Canadian dollars, the yen edged down to 148.17, 96.73, 88.26 and 107.53 from Tuesday's closing quotes of 147.78, 96.49, 88.04 and 107.32, respectively. On the downside, 152.00 against the greenback, 98.00 against the aussie, 89.00 against the kiwi and 109.00 against the loonie.

Looking ahead, U.S. MBA mortgage approvals data and U.S. EIA crude oil data are slated for release in the New York session.